Newbie just offered a lease for gas rights...questions help me w/questions!

Hi all,

 

I will apologize right up front for sounding like a dummy about this!  I am just now learning so please bear with me! That being said...

 

My family knew we had mineral rights (only...someone else owns the land) on roughly 80 acres in Clearfield County that family had left us. 

 

We recently had a landman find us (we live in another state) and offer a deal ... 5 yr lease, $1500 per acre, 15% royalty.   Now, I have to say I am confused about the 15% and how/when that would come into play since we don't own the surface rights.  Supposedly they are ready to drill in the area before winter and next summer.   I am wondering if the 15% will ever come to fruition in the area?  As i said, I havent been in the area for ten years now. Can someone explain to me more about the royalty and if it is likely I would even get that?

 

As I said, we really know nothing about how all of this works and I am in the learning stages and very overwhelmed. 

 

Can those of you who have expereince with this answer a few questions:

 

1.  who are honest, reputable attorneys in the area

 

2.  Does that sound like a good deal?

 

3.  Is it typical in that area for a landman to track you down and offer you a deal over the phone (lease obviously would be sent to me).  It just all seems odd to me.   What should I be asking.  How do I know he's reputable.  I have gotten his name, who whe works for, the gas company, address.

 

Any light you can shed, advice, etc,  would be much appreciated!!  I will not be making a decision until I have researched & spoken to an attorney but wanted to ask others that have experience w/it as an owner.

 

Thanks so much!!

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Replies to This Discussion

ajn,

 

Congratulations!  Now do your homework.  This topic has consumed the lives of many in our area, for several years.

1) I'm not in a position to recommend a lawyer.

2) "good" is relative.  Lots of people signed leases in eastern clearfield county with similar terms.  Your circumstances determine if it is a good deal.  Since you don't own the surface, you probably don't much care if they put a compressor station on it, or a 50 ft wide pipeline ROW.  If you "need" the money, $1500/acre sounds good, if you don't you may hold out for more.  As for the royalty, 15% is also about average in eastern Clearfield county.  But consider you may never see any royalty in your lifetime.  If the lease permits, the company can drill a shallow well and cap it, without production (a shut in well) will hold the lease indefinately, without royalties.  The lease may also allow pooling with adjacent lands they hold leases on.  Do those lands already have shut in wells on them?  Does the lease allow deductions for transportation, drying, making the gas marketable, etc...  I've read that those deductions can take 47% off the top of your royalty.

To start off, search the web for "gas lease checklist", you should find some "free" advice on clauses to look for and what they mean. 

 

3) Yes it is typical, especially if you are out of the area.  It is also typical for them to tell you they are ready to drill.  If you post the company name here, you will likely get responses as to their reputation.  Some companies are likely to drill, some are not. Don't sign the lease based on anything any landman says.  Expect that no promises will be upheld unless they are in writing.

 

Regards,

Peter

 

hello I am in Ohio but i do a lot of research into the subject .At the end here I will post a copy of a lease that was accepted a few years back in your state ,I don,t know how far that town is from you but this will give you some idea of what the lease should read as well as how much to expect. I hope this helps you .It is strange now they are trying to decide in your State if the Marcellus is a gas or a mineral because someone had 1/2 of the mineral and oil willed to them from a previous owner of a piece of property . Then the current owner leased out to a company to produce the shale gas from the same property .It is being decided in court I guess you may look this up. Anyway here is this lease as I said I hope it helps you catch up fast . Take care good luck .

http://www.thefriendsvillegroup.org/lease.pdf

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